Just after some info regarding short term rental of a holiday home to enable it to be classed as an investment property, while still used as a holiday home.
I have found some info that basicaly says that the home must be available for rent the whole year at commercial rates. I would expect the deductions to be proportional to the time spent in the house by the owner.
eg : 26 weeks use by owner and 26 weeks rented out- 50% of expenses deductable, or something like that.
But what about the more common situation of:
4 weeks by owner, 12 weeks by rental, 6 weeks rented to friends at reduced rate, 30 weeks vacant in off season, and the property is "advertised" for rent the whole time.
Seems like there may be a few grey areas on this one.
Thanks.
Hi Jazz,
Deductions are available for when the property is available for rent. If no-one is renting it during the off season, yet is still advertised and available, the deductions can be claimed.
When renting to friends at a reduced rate, the deductions for this period should also be reduced. eg, if you rent is at 40% of market value, your expenses for this period would also be limited to 40%.
Similiarly, when you are using it, the property is unavailable for rent, and no deductions can be claimed during this period.
If the property is not available for rent in the peak season the ATO will not necessarily regard availability as an appropriate apportionment method but might consider actual period rent was received for as a more appropriate apportionment method. The issue being whether the characterisation of the house is as a means of earning income or whether it is a personal lifestyle choice where some income is received to offset expenses
Thanks for the info,
Interesting point about the 40% rate and 40% of expenses claimed.
Realisticaly i dont expect to be able to spend more than 5 weeks there a year at the moment. We are currently advertising at a reduced rate through social networks to generate interest and then hopefully book out more of next year at a higher rate.
crj wrote:If the property is not available for rent in the peak season the ATO will not necessarily regard availability as an appropriate apportionment method but might consider actual period rent was received for as a more appropriate apportionment method. The issue being whether the characterisation of the house is as a means of earning income or whether it is a personal lifestyle choice where some income is received to offset expensesIs it still the case if the property is partially used in 'peak season' however is CF+?
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